Playgon Games : Q1 2022 MDA

PLAYGON GAMES INC.

Management Discussion and Analysis

For the three months ended March 31, 2022

Playgon Games Inc.

Management's Discussion and Analysis

For the three months ended March 31, 2022

This management discussion and analysis ("MD&A") of financial position and results of operation is prepared as at May 27, 2022 and should be read in conjunction with the unaudited condensed interim consolidated financial statements for the three months ended March 31, 2022 of Playgon Games Inc. and its wholly owned subsidiaries ("Playgon" or the "Company") and the consolidated financial statements of the Company for the year ended December 31, 2021. The following disclosure and associated financial statements are presented in accordance with International Financial Reporting Standards ("IFRS"). Except as otherwise disclosed, all dollar figures included therein and in the following MD&A are quoted in Canadian dollars. Additional information relevant to the Company's activities can be found on SEDAR at www.sedar.com.

FORWARD LOOKING STATEMENTS

The Company's condensed interim consolidated financial statements for the three months ended March 31, 2022, and this accompanying MD&A contain statements that constitute "forward-looking statements" within the meaning of National Instrument 51-102.Continuous Disclosure Obligations of the Canadian Securities Administrators.

It is important to note that, unless otherwise indicated, forward-looking statements in this MD&A describe the Company's expectations as of May 27, 2022.

Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the Company's actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information. The information set forth in this MD&A contains statements concerning future results, future performance, intentions, objectives, plans and expectations that are, or may be deemed to be, "forward-looking statements". These statements concerning possible or assumed future results of operations of the Company are preceded by, followed by or include the words "believes", "expects", "anticipates", "estimates", "intends", "plans", "forecasts", or similar expressions. Forward-looking statements are not guarantees of future performance. These forward-looking statements are based on current expectations that involve certain risks, uncertainties and assumptions. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate. These factors should be considered carefully, and readers should not place undue reliance on forward-looking statements. The Company has no intention and undertakes no obligation to update or revise any forward-looking statements, whether written or oral that may be made by or on the Company's behalf, except as may be required by applicable law.

All of the Company's public disclosure filings may be accessed via www.sedar.comand readers are urged to review these materials.

DESCRIPTION OF THE COMPANY'S BUSINESS

The Company is a Business-to-Business ("B2B") Software-as-a-Service ("SaaS") technology provider focused on developing digital content for the growing iGaming Market. The Company platforms provide a multi-tenant gateway that allows online operators the ability to offer their customers innovative iGaming software solutions ("Live Dealer Product") and a customized daily fantasy sports ("DFS") software solution ("DFS Product"). The Company's common shares are listed on the TSX Venture Exchange ("TSX-V") under the symbol "DEAL".

On June 19, 2020, the Company completed the purchase of Playgon Interactive Inc. ("Playgon Interactive") from its shareholders (the "Playgon Acquisition"). Playgon Interactive, a private British Columbia corporation and leading technology innovator in the gaming market, developed a suite of digital products that bring the fun and entertainment of casinos to casino players everywhere via their unique and proprietary mobile first interface and the traditional desktop medium. Playgon Interactive's value proposition offers the proven appeal of physical casinos, with a suite of interactive live dealer games that appeal to players in a very personal way by giving real human interaction between dealers and players. Playgon

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Playgon Games Inc.

Management's Discussion and Analysis

For the three months ended March 31, 2022

Interactive's proprietary live dealer technology is designed to operate in both real money and social gaming verticals. In a live casino game, a human dealer operates the game in real time from a casino gaming table, which can be seen via a live streaming video link. Players can make betting decisions via their mobile device or desktop and can communicate with the dealer in real time via a software interface.

In addition, Playgon develops all of its live dealer games in E-Table versions, which is Playgon's version of the live dealer games using a random number generator. Playgon has introduced unique digital table games to players world-wide, all optimized for one-handed play.

As a true B2B SaaS provider, the Company's products are ideal turn-key solutions for online casinos, sportsbook operators, land-based operators, media groups, and big database companies. The Company enables its customers to seamlessly integrate into its Live Dealer Product, E-Table games and DFS Product thereby allowing their individual end users easy access to iGaming software solutions and content. thereby allowing their individual end users easy access to iGaming software solutions and content.

Highlights

During the three months ended March 31, 2022, the Company recorded $140,877 in revenue from its Live Dealer Product. During the three months ended March 31, 2022, the Company was able to successfully onboard 9 operators for a total operator count of 35 as at March 31, 2022. During the three months ended March 31, 2022, the Company saw increased player activity as a result of additional operators going live. This was offset by an increase in player win percentage resulting in decreased player loss during the period. Player win percentage is subject to a significant level of volatility on a month-to-month basis but is expected to normalize over an extended period of time.

In addition to onboarding new operators, the Company plans to enter new regulated markets in 2022 with a focus on Latin America and North America to complement its customer growth in Europe.

On May 4, 2022, the Company announced that it has applied for a Gaming Related Supplier - Manufactures License with the Alcohol and Gaming Commission of Ontario (the "AGCO"). The License will enable the Company to supply AGCO approved operators with its Live Dealer Product.

On February 24, 2022, the Company announced that Bobby Soper was appointed to the Company's Board of Directors. Mr. Soper brings two decades of experience overseeing the development of numerous projects from the ground-up. He has served as International President of Mohegan Gaming & Entertainment, as well as the CEO of the Mohegan enterprise. Upon the appointment of Mr. Soper, Jason Meretsky stepped down from the board of directors.

On Jan 12, 2022, the Company signed a multijurisdictional software licensing and distribution agreement with Relax Gaming. Under the terms of the agreement, Relax Gaming will add and market Playgon's proprietary mobile first live dealer and E-table game offerings under the VegasLoungeTM brand, to its content library for availability and distribution to all Relax Gaming's global client base. The agreement is for three years with licence fees based on commercial revenue sharing rates.

Live Dealer Product

Its current software platform includes a Live Dealer Casino ("LDC") which includes the most popular table games, and E-Table games, which are Playgon's version of random number generated (RNG) table games.

The Company is focused on leading the innovation curve in LDC technology with an unmatched mobile first platform. Playgon will stream the first and only LDC action from Las Vegas, Nevada (Vegas Lounge™) for regulated online casino gaming markets globally. Live dealer gaming is one of the fastest growing segments in the online casino market where mobile-devices generate over 70% of casino revenues. Players are able to experience a highly interactive gaming experience through any browser on any mobile device with Playgon's Live-Dealer casino from Las Vegas, Nevada.

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Playgon Games Inc.

Management's Discussion and Analysis

For the three months ended March 31, 2022

The Company leases a 12,000 sq. ft. state-of-the-art broadcasting studio streaming live casino games with dealers from Las Vegas. The LDC games cover the classic and most played casino favourites, Roulette, Blackjack, Baccarat and Tiger Bonus Baccarat™, a proprietary game. All LDC games come with new in game features and functionality to boost online casino revenues and enhance player engagement.

Playgon's proprietary live dealer technology is designed to operate in both real money and social gaming verticals. In an LDC game, a human dealer operates the game in real time from a casino gaming table, which can be seen via a live streaming video link. Players can make betting decisions via their mobile device or desktop and can communicate with the dealer in real time via Playgon's software interface.

Daily Fantasy Sports Product

The Company's DFS software and network can be licensed to customers offering a customized and fully branded DFS to their end users.

DFS is a subset of year-long fantasy sport games. As with traditional fantasy sports games, site end users compete against others by building a team of professional athletes from a particular league or competition and earn points based on the actual statistical performance of the players in real-world competitions. DFS is an accelerated variant of traditional Fantasy Sports Games that are conducted over short-term periods, such as a week or single day of competition, as opposed to those that are played across an entire season and is one of the fastest growing segments of the fantasy sports industry today. DFS is structured in the form of competitions referred to as a contest, where site end users pay an entry fee in order to participate and build a team of athletes in a certain sport while complying with different contest rules. Depending on the overall performance of the athletes selected, site end users may win a share of a pre-determined prize pool.

Revenue Segmentation

The Company currently anticipates two sources of revenue. The first is for licensing and use of the Company's SaaS products. The second are set-up fees which typically pay for the integration, customization and branding of the customer site for the use of our Live Dealer and DFS products.

The online gaming industry is heavily regulated, and the Company will license its products to customers who hold a gaming license. Initially, the Company's target markets are outside of North America, however, due to the accelerated growth of the United States and Canadian market the Company has advanced plans to enter the North American market as well.

On March 23, 2021, the Company commenced its United States strategy towards licensing efforts in New Jersey, Pennsylvania and Michigan, by engaging Duane Morris LLP in New Jersey. Completion of this process would allow the Company to offer its Live Dealer technology to customers within those states. The timing for entry is fluid and will be driven by customer acquisition and studio cost consideration to service individual markets. The iGaming and Sport Betting industry is expected to exceed $12.9 billion in market size by 20251 and presents a significant opportunity for the Company.

On April 4, 2022, iGaming Ontario (iGO), a subsidiary of the Alcohol and Gaming Commission of Ontario (AGCO) launched a new regulated regime for on-line gaming in Ontario. The Company has made application with the AGCO to service this market with its current Las Vegas studio. The decision on market entry will depend on customer acquisition. Ontario's licensed online gaming and sports betting market will generate gross revenues of C$989m in its first year of opening, growing to C$1.86bn by 2026. Ontario, the first province to allow private operators to offer online gambling, is set to be one of the largest online gambling markets in North America, alongside Pennsylvania, New Jersey and Michigan.

1 Vixio Gambling Compliance

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Playgon Games Inc.

Management's Discussion and Analysis

For the three months ended March 31, 2022

Principal Products and Services

The Company platforms are a multi-tenant B2B gateway, which allows customers to offer their end users a Live Dealer product or a DFS product. Both products have been built with a mobile first philosophy that allows for seamless integration at the customer level and provides a gaming experience that is optimized for one-handed play.

As a true B2B digital content provider, the Company offers a SaaS product that provides a turn-key solution for sportsbook operators, land-based operators, media groups and big database companies to experience its Live Dealer Product or a DFS Product, without having to incur large upfront costs to monetize this new business and add incremental revenue to their business.

The Company's online offering is designed for gaming operators worldwide. The platforms integrate into a gaming operator's website, whereby the Live Dealer Product or the DFS Product will be immediately available to the end users. The end user will easily be able to access the Live Dealer or the DFS products using any modern browser via a desktop or mobile device. This allows any customer end-user the ability to access the content from any device, with the benefit that a user can pause and transition the experience across any number of devices. While the end user accesses the offering through an operator's website, the Company maintains and operates the platform, but not the wallet which is in the control of the end operator, to ensure a safe and secure ecosystem without conflict of interest.

Available Live Dealer games include Blackjack (Regular & Common Draw), Roulette (European & American), and Baccarat (Regular & No Commission).

Available E-Table games (multiplayer & single player) include Blackjack, Baccarat and Roulette. The Company's development roadmap will include the following E-Table games dictated by customer demand Craps, SicBo, Pai Gow, Pai Gow Poker, Andar Bahr, Dragon Tiger, Red Dog, Holdem Poker and Three Card Poker.

Product Development

Live Dealer

Playgon Interactive was founded in 2016 and is an innovator in the online casino gaming segment, developing a suite of products that bring the complete fun and entertainment of casinos to everyone, everywhere. Playgon's value proposition offers the proven appeal of casinos, with a core of interactive live dealer casino table games that appeal to players in a very personal way. Playgon will further enhance its offering with E-table games.

Playgon employs best-in-breed technology to deliver a seamless, interactive, and immersive online casino experience. Playgon Interactive is a mobile-first developer, where every game created has been made with mobile gaming in mind. Playgon Interactive's focus is on mobile-first ergonomic designs and single-touch interactivity, bringing cutting-edge handheld features in portrait mode and functionality to gambling enthusiasts who have long been demanding a world-class mobile experience.

Playgon's proprietary technology is built for robustness, scalability, and user experience. Playgon makes use of the latest technologies, like Progressive Web Apps, to deliver a fast, secure, native-like unmatched user experience in portrait mode.

Daily Fantasy Sports

DFS is currently developed for the five major European football leagues and North American and European golf. As the industry further matures the Company will revisit the marketing of the DFS product.

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